FTX’s senior executive warns Bahamian authorities about fraud two days before the bankruptcy of the exchange

According to Ryan Salame, the assets were to cover the financial losses of the trading firm associated with the platform, Alameda Research

15.12.2022 - 10:45

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What’s new? Ryan Salame, head of the FTX crypto exchange’s arm in the Bahamas, told the local regulator about the platform’s potential fraud two days before filing for bankruptcy. He told the Bahamas Securities Commission (SCB) that FTX was sending customer funds to an affiliated trading firm, Alameda Research. According to Salame, the assets were supposed to“cover financial losses of Alameda” and the transfer was “not allowed or consented to by their clients.”

Court documents

What else did Salame report? The head of FTX’s arm said that only three people had the access necessary to transfer customer assets to Alameda. He said they were former FTX CEO Sam Bankman-Fried, exchange co-founder Gary Wang and engineer Nishad Singh.

SCB executive director Christina Rolle contacted the commissioner of the Royal Bahamas Police Force and demanded an investigation because it could be about misappropriation or theft of funds, fraud, or “some other crime.”

On November 10, the regulator froze the assets of FTX Digital Markets and suspended the company’s registration in the country. At the same time, the Supreme Court of the Bahamas appointed a temporary liquidator for the firm to preserve its assets.

According to documents, Salame is in Washington, D.C., and has not spoken publicly since FTX’s collapse.

Bankman-Fried was arrested on December 12 in the Bahamas on charges from the US Attorney’s Office. He is in custody until at least February 8 and is awaiting an extradition hearing. The court did not release him on bail for fear of escape.

On November 13, the US Securities and Exchange Commission (SEC) accused Bankman-Fried of secretly transferring $1,8 billion of FTX customers’ funds to Alameda. The US Commodity Futures Trading Commission (CFTC) accused FTX of giving Alameda a “speed advantage” that allowed it to execute orders faster.

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